Exployee teaches for a modest salary for 28 years. Then in his last 2 years, accepts a managers position. When he retires, pension pays out equivolent to 2/3 salary based on his last 3 quarters.
So he gets a management level pension, having only paid in only on rank and file salary. So again... how do we solve this?
throw the pension and average year salary equation out the window. replace with a straight up simple 401k type system. employees required to contribute X% and employers required to match Y%. you make more, you contribute more. give people all the documentation and knowledge sessions to make an informed decision on how to invest it. Give them the option to see someone in the retirement office once every 2 years to review. only have 5 options for investments. tips, total bond index, total US stock index, total international index, and an aggregated return on cd ladders of 1, 3, 5, and 7 years. when the time for retirement comes, you get to stop by the local system office to crunch the numbers on your immediate annuity payout using an inflation % based on the last 5 or 10 years of inflation averaged out. nothing but the basics. folks have other options to get fancy on if they want. ira/roth, taxable funds, etc..
give them all the tools, and empower people to do what they want. choice is up to them.
